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Fiscal shocks and subnational government finances: evidence from Indian states
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DOI：10.1007/s10101-026-00350-w.png)
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Abstract
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Given the significance of subnational government (SNG) finances in government expenditure, we analyze the impact of fiscal shocks on subnational finances in Indian states. We find that gross state domestic product and outstanding debt have a positive response to a positive spending shock. The impact is more pronounced in the earlier years and becomes muted in the subsequent years. The price level, on the contrary, responds negatively to the positive spending shock, adding to the empirical evidence on 'price puzzle'.
Keywords:
Subnational finances
Fiscal policy shock
Panel vector autoregression (PVAR)
Panel structural autoregressive (PSVAR)
E62
H72
H74
H77
Journal
E
IF:
0.8
Papers:
19
Citations:
453
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